Buying up the farms

Policy developments may be thin on the ground as politicians around the world take a break, but that hasn't stopped a flurry of wind and solar acquisitions.

August may be a quiet month for policy developments in clean energy, with many of the decision-makers on holiday, but recent days have seen a flurry of project acquisition deals. Theolia of France announced the sale of an 18MW wind farm to its investment vehicle – Theolia Utilities Investment – to recover cash for future projects.

Consolidated Edison's development unit bought two solar plants in California from GCL-Poly Energy Holdings for $US266 million. The plants – with a capacity of 92MW – are slated to start operating in the fourth quarter.

The share price of Canadian renewable energy developer Western Wind perked up after it announced that it was up for sale. The company owns and operates three wind farms in California totalling 154.5MW, and a 10.5MW combined wind and solar plant in Arizona. It was awarded a $US78.3 million grant on July 10 under the US Treasury Department's 1603 cash grant program.

Arise Windpower signed a contract to take over a project in northern Sweden – though the final agreement is conditional on the resolution of some issues with the landowners. JMB Energie Group agreed to buy a 65.3 per cent stake in Aerowatt – a French developer of wind and solar projects. The company operates wind power plants totalling 113MW, and 21MW of solar installations.

JA Solar Holdings said it would take control of a company making solar-grade mono-crystalline ingots from polysilicon maker M.Setek, to settle a supply dispute.

On the other hand, the proposed acquisition of Fersa Energias Renovables by Danish power developer Greentech Energy Systems was voted down by the shareholders of the latter company as they had reservations about the target firm’s complex shareholder structure.

China's Sky Solar – a developer of solar projects – announced that it planned to sell equity through an initial public offer overseas, to raise $US300 million. The proceeds would be used to fund new projects. Besides China, the company is active in Japan, Chile, Brazil and Argentina – all slated to be the next growth markets for solar.

There was some traction in the bond market too. Spain's Acciona is seeking to issue $US332 million of debt due in 2031, to finance its two wind projects in Mexico, Bloomberg News reported. The backing that the projects have from the Mexican government would fuel demand for the bonds, according to analysts.

The last significant bond issue for a renewable project was by Warren Buffett's MidAmerican Energy Holdings in February, to finance a solar park. Insurers hold more than 76 per cent of that $US850 million issue maturing in 2039.

The other main announcement of the week was in the field of offshore wind. Mainstream Renewable Power – an Irish clean energy developer – applied to build a $A2 billion wind farm off the coast of Scotland. It plans to complete a financing agreement for the 450MW plant next year and begin construction at sea in 2015.

On the policy side, the US Senate Finance Committee voted in favour of extending some tax breaks for one year, including those for wind energy. The Production Tax Credit is set to expire on December 31 2012. Whether it would actually be extended depends on approval from the Senate and the House of Representatives – and prospects there are quite uncertain, given the presidential election timetable.

In another part of the world, the impending cutback of incentives continues to drive solar installations. About 4.4GW of panels were installed in Germany in the first half of the year against the government's target of up to 3.5GW for the whole of 2012. About 1.8GW of panels were added in June alone as developers rushed to connect plants. Bloomberg New Energy Finance expects total solar installations in the country this year to be anywhere from 6GW to 8GW.

In France, the ministry of environment, sustainable development and energy approved 541MW of solar projects for feed-in tariffs, selected through two competitive tenders and involving an investment of about €1bn. GDF Suez won rights to build a 13.9MW solar plant – the largest in the reverse-auction tender under which companies that offer to sell power at the lowest power price are granted approval.

EU carbon price

European carbon allowances, or EUAs, for December 2012 delivery advanced last week following positive economic news from the US. EUAs gained 2.8 per cent, closing at €7.11/tonne, compared with €6.92/t at the end of the previous week. They were trading at a weekly low of €6.53/t on Monday afternoon before rising on Tuesday. EUAs rose to a weekly high of EUR 7.29/t on Thursday afternoon as Brent crude oil leaped above $US106/barrel ahead of European Central Bank president Mario Draghi’s first press conference after he promised to do “whatever it takes” to protect the euro. Brent crude oil continued its gains on Friday, closing the week 2 per cent higher at $US108.63/bbl.

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